a.k.a. Brands Holding Corp. (NYSE:AKA) Q4 2024 Earnings Call Transcript

a.k.a. Brands Holding Corp. (NYSE:AKA) Q4 2024 Earnings Call Transcript March 6, 2025

a.k.a. Brands Holding Corp. misses on earnings expectations. Reported EPS is $-0.88 EPS, expectations were $-0.14.

Operator: Greetings, and welcome to a.k.a. Brands Holding Corp. Fourth Quarter and Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this call is being recorded. It’s now my pleasure to introduce Emily Schwartz. Thank you. You may begin.

Emily Schwartz: Good afternoon. Thank you for joining a.k.a. Brands to discuss our fourth quarter and fiscal 2024 results. The release was issued this afternoon and can be found on our website at ir.aka. With me on the call today are Ciaran Long, Chief Executive Officer, and Kevin Grint, Chief Financial Officer. Before we get started, I’d like to remind you of the company’s Safe Harbor language. Management may make forward-looking statements, which refer to expectations, projections, and other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For a further discussion of risks related to our business, please see our filings with the SEC.

Please note, we assume no obligation to update any such forward-looking statements. This call will also contain non-GAAP financial measures such as adjusted EBITDA and adjusted gross margin. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the release furnished to the SEC and available on our website. With that, I’ll turn the call over to Ciaran.

Ciaran Long: Good afternoon, everyone, and thanks for joining us. This marks my first call as the permanent CEO. I’m thrilled to build on the foundation we’ve established over the past few years at a.k.a. Brands through this next chapter of growth. I’d also like to introduce Kevin Grint, our Chief Financial Officer, who was appointed to the role in the first week of January. Prior to becoming the CFO, Kevin was the company’s controller and a key senior leader at a.k.a. Brands since April 2021. Kevin joined a.k.a. from Walmart, where he spent seven years in senior finance positions. Prior to that, he spent eleven years at Ernst and Young. I’m excited to have him on the call today. 2024 was an exciting and pivotal year for a.k.a. Brands, marking a fundamental shift in our trajectory.

I’m particularly proud that we delivered results ahead of our expectations, which is a testament to our team’s ability to execute at the highest levels. Thank you to our team for their hard work and dedication in building next-generation fashion brands as well as their consistent innovation and enthusiasm towards serving our customers. Before I go through the results, I’d like to highlight some key achievements for the past year. In 2024, we achieved a significant milestone by stabilizing the business and returning to growth. We delivered $575 million in net sales, representing a 5.2% increase over the prior year. In the US, which is our largest market, we delivered an impressive 17% net sales growth, underscoring the strength of our brands and the long runway of opportunity ahead in the region.

We successfully attracted new customers and strengthened our bond with existing ones, resulting in an impressive 9% growth in our trailing twelve-month active customer base, surpassing four million customers. We expanded our omnichannel initiatives to drive profitable growth and enhance brand awareness. We opened five Princess Polly stores throughout California, Arizona, and Boston, and our women’s brands furthered their wholesale tests with leading retailers such as Nordstrom. We enhanced our assortment with fresh, high-quality merchandise, resulting in stronger full-price sales and a 200 basis point improvement in gross margin to 57%. Lastly, given the strength and flexibility of our business model, we delivered $23.3 million of adjusted EBITDA, which represented significant year-over-year growth of 69%.

Our strong financial performance and ability to execute our strategy give me great confidence in a.k.a. Brands’ many profitable growth opportunities ahead. As we look at 2025, we are steadfast in our focus on growing our brands and enhancing our overall profitability. Momentum continues, with the quarter-to-date net sales growth consistent with our Q1 outlook of 4% to 6%. We’re confident in our full-year sales outlook of $600 million to $610 million, representing growth of 5% at the midpoint, and adjusted EBITDA of $27.5 million to $29.5 million for the year. Building on the success of last year, we remain focused on three key priorities:

Emily Schwartz: First, we will attract and retain customers through our direct-to-consumer channels.

Ciaran Long: Our brands are already on their journey, and we believe we have significant opportunity to grow awareness of our brands. This includes the evolution of our test-repeat merchandising model and delivering on our promise of curating new, on-trend exclusive fashion to customers weekly. We’ll also leverage differentiated and innovative strategies across multiple marketing platforms to deepen our direct connection with customers. Second, building upon our already successful initiatives, we will expand our reach and total addressable market through physical retail and growing our wholesale partnerships. As you saw in our press release this afternoon, we will open seven new Princess Polly stores in 2025, with our first store in New York City slated to open next week.

We’re also expanding our wholesale presence. Princess Polly and Petal and Pup will launch across Nordstrom’s entire store fleet this month. Third, we remain committed to streamlining our operations and strengthening our financial foundation. As part of this, we will continue to harness the power of our flexible technology ecosystem, which allows us to explore new AI capabilities to deliver great customer experiences and drive operational excellence with minimal capital investments and resources. In combination with our comprehensive set of customer data, we will leverage AI-driven solutions to personalize customer journeys, predict shopping behaviors, optimize marketing, streamline inventory planning, and operational workflows. Now let me share some recent highlights from our brands as well as growth drivers for 2025.

Starting with Princess Polly, our largest brand that’s well known for its trend-driven designs and authentic connection with its customers. Princess Polly has climbed to popularity in the US over the past several years as an online-only brand. I’m pleased that the brand continues to resonate with its customers through innovative merchandising and marketing strategies. Anchored on our data-driven test-to-repeat merchandising models, Princess Polly consistently drops new collections and styles to stay ahead of the trends and capitalize on big moments, such as upcoming festival, prom, and graduation collections, and an exclusive edit with Ashton Earl, which launched earlier this week. Core to the Princess Polly brand is its next-generation marketing approach, which blends traditional and cutting-edge marketing initiatives to foster deep connections with its customers.

In 2025, as part of our strategy to attract and retain customers, Princess Polly will lead with its influencer strategy on social media while also fine-tuning over thirty different marketing platforms, including WeChat, Netflix, and other phone billboards, to build upon the momentum and brand affinity. Though Princess Polly remains primarily a digital-first fashion brand, the brand is expanding its footprint to remain at the forefront of the next generation of retail. In September of 2023, Princess Polly took a significant step by launching the brand into physical retail with its first store in Los Angeles. The in-store customer response exceeded our expectations, validated our omnichannel vision, and led Princess Polly to open five more stores in 2024.

Stores drive revenue and profitability; however, their strategic value lies in expanding brand awareness, acquiring new customers, and creating deeper, more meaningful connections with our existing customers through enhanced touchpoints and physical experiences. More than thirty percent of customers shopping in our stores are new to Princess Polly on their first visit. Importantly, while it’s still early days, we’ve observed an incremental lift in our online business in the surrounding radius when a store opens, confirming our thesis that we’re expanding our market share with each new location.

Emily Schwartz: We are excited to announce that we will be opening our latest physical exploration of the Princess Polly brand in SoHo, New York City, next week. The opening will be supported by an engaging series of launch celebrations, featuring in-store grand opening events and citywide activations. We encourage those of you in New York to come out and experience the brand firsthand. Moving on to store momentum, I’m excited to announce Princess Polly will open seven new stores across the U.S. in 2025, which would bring the total number of stores to thirteen by year-end. In addition to New York City, Princess Polly will unveil stores in top shopping destinations across the country, including New York, Florida, California, Ohio, and Pennsylvania.

From a timing perspective, four stores will open in the first half of the year, with the remaining stores slated to open in the back half. Building upon its omnichannel model, Princess Polly is also expanding its reach through strategic partnerships with leading retailers. Following a highly successful pilot across twenty Nordstrom locations in the fourth quarter, Princess Polly will launch new styles across all Nordstrom stores nationwide in the first quarter, further validating that broader consumer exposure consistently drives strong demand for our brands. Princess Polly also recently launched over seventy styles on asos.com in the UK, establishing the groundwork for future global expansion. Petal and Pup, our other women’s brand, appeals to females in their 20s and 30s with its stylish, feminine designs that make fashion accessible and empowering for life’s biggest moments.

Building on its digital foundations, Petal and Pup is strategically expanding into new channels, driving brand awareness while achieving strong performance across all partnership launches. As we announced in January, Petal and Pup had a very successful test across Nordstrom’s website and half of their store fleet in 2024, and will now be featured in all Nordstrom stores later this month. In addition to its omnichannel expansion, Petal and Pup continues driving customer engagement through multichannel marketing strategies, leveraging influencer partnerships, social media campaigns, in-person events, and out-of-home advertising, including high-impact billboards. The brand is equally focused on strategically expanding its assortment, highlighting key trends such as everyday basics, elevated footprints, and this season’s trending colors.

Petal and Pup also continues to strengthen its exclusive style portfolios, capturing additional share of wallet with its second wedding guest, modern romance collection, which exceeded performance expectations and deeply resonated with customers during the collection’s debut last spring. I’m more confident than ever that Petal and Pup is well-positioned to capitalize on significant untapped market potential. Shifting to our streetwear brands, we’ve made great progress over the last eighteen months optimizing Culture Kings’ operations across both regions, and the results are very encouraging. We’ve added strategic hires at the beginning of 2025, including a new president of Australia and the global head of in-house brands, who brings valuable experience to both our US and Australian operations, positioning Culture Kings for long-term growth and innovation.

Culture Kings stands apart in the streetwear landscape, leading with its in-house design apparel, positioning the brand for sustained long-term growth. Culture Kings’ in-house brands, including sought-after labels like Minimal, Loiter, Carre, and Saint Morta, consistently rank among top sellers both online and at the Las Vegas flagship store. To complete the streetwear outfit and enhance its market credibility, Culture Kings complements these in-house brands with exclusive footwear, headwear, and accessories from premium third-party brands, including industry titans like New Era, Mitchell & Ness, and New Balance. In the back half of last year, Culture Kings began narrowing its focus on their top in-house and third-party brands that really moved the needle.

This included shifting our in-house brands to a test-and-repeat merchandising approach, which creates more fashion newness and reduces inventory risk. Culture Kings’ in-house brand, Loiter, is leading this merchandising transition and showcasing the effectiveness of the model. In the fourth quarter, Loiter put up another quarter of triple-digit revenue growth, with gross profit dollars growing even faster year over year. There is nothing quite like the immersive experience of Culture Kings’ Las Vegas flagship store, and we’re actively looking for our next Culture Kings store location in the US, which will be smaller than our Vegas store while retaining key immersive elements such as the half basketball court and hat wall. The immersive store and retail payment atmosphere are core to the Culture Kings’ marketing strategy of creating unforgettable moments around product launches, in-person experiences, and tenfold moments that resonate deeply with its customer base.

Before I pass it to Kevin, I’d like to reiterate my thanks to our incredible team for delivering a great year. Our portfolio consists of young brands still early in their growth trajectories with substantial global potential ahead. I’m confident that we have the right strategic initiatives in place and complete alignment across our teams to drive another year of strong performance in 2025. With that, I’ll turn it over to Kevin to walk you through the financials.

Kevin Grint: Thanks, Ciaran. Let me start by saying that I’m thrilled to take on the role of CFO at a.k.a. Brands. I look forward to working closely with all of you. As Ciaran noted, prior to assuming the role of CFO, I was the company’s controller and have been deeply involved in the company’s financials since before our initial public offering. Now let me dive deeper into our fourth-quarter results and give you our view on 2025. As Ciaran noted, for the fourth quarter, net sales increased 6.8% to $159 million and 6.7% on a constant currency basis compared to the same period last year. This was driven by strength in our U.S. business, in which net sales increased 21.6% compared to the fourth quarter of last year. This was partially offset by a 9.6% sales decline in Australia and New Zealand, as compared to the fourth quarter of 2023.

Net sales in the rest of the world region declined 13.5% year over year. Early signs from Australia in 2025 are encouraging, and we expect the region to improve this year thanks to our team’s extensive work in transitioning Culture Kings to a test-and-repeat model while optimizing operational efficiencies across the region. Total orders for the fourth quarter were 2.04 million, increasing 3.6% as compared to the fourth quarter last year. Our trailing twelve-month active customer count rose to 4.07 million by the end of the fourth quarter, a robust 9.4% increase compared to a year ago. Our fourth-quarter average order value was $78, increasing 2.6% compared to the fourth quarter last year. Turning now to our profitability metrics, gross margin was in line with our expectations and expanded 460 basis points in the fourth quarter to 55.9%, compared to 51.3% in the same period last year.

The increase in gross margin was driven by a higher penetration of newness and full-price selling, and we also received the benefit of lapping markdown actions that we took in Australia in the fourth quarter of 2023. Selling expenses were $44.6 million compared to $42.3 million in the fourth quarter of 2023. As a percentage of net sales, selling expenses were 28%, compared to 28.4% a year ago. Marketing expenses in the quarter were $22.3 million compared to $17.3 million in the fourth quarter of 2023. As a percentage of net sales, marketing expenses were 14% compared to 11.6% in the fourth quarter of 2023. General and administrative expenses were $24.9 million compared to $22.3 million in the fourth quarter of 2023, due to an increase in incentive compensation and non-routine legal matters.

As a percentage of net sales, G&A expenses increased to 15.7% from 15% in the fourth quarter of last year. We’re pleased that we delivered adjusted EBITDA of $6.2 million compared to $1.3 million in the same period last year, ahead of expectations. Adjusted EBITDA margin for the fourth quarter of 2024 increased 300 basis points to 3.9% compared to 0.9% in the same period last year. Turning now to the balance sheet, we ended the quarter with $24.2 million in cash and cash equivalents, compared to $21.9 million at the end of the fourth quarter of 2023. We ended the year with $111.7 million of debt. As a reminder, we’ve significantly reduced our leverage by over a turn and a half over the past two years, and we’re committed to bringing leverage down even further.

We ended the quarter with $95.8 million in inventory, an increase of 5% compared to a year ago. We are very pleased with our ability to effectively manage our inventory growth below our net sales growth, demonstrating the benefits of the test-and-repeat merchandising approach. Looking at 2025, we feel good about the quality and composition of our inventory, and we are confident that we are well-positioned as we head into our brands’ key spring and summer seasons. We generated $7 million in operating cash in the fourth quarter, compared to $15 million in operating cash in the same period last year. A quick update on our stock buyback program: we continue to believe that our stock is undervalued, and in the fourth quarter, we purchased 11,000 shares at a total cost of $243,000.

As of the end of 2024, we have $1.3 million remaining in our share repurchase authorization. Looking ahead, as Ciaran mentioned, we’re encouraged by the momentum we’re seeing and confident that our strategic initiatives will deliver solid top-line growth and profitability over the near and long term. For the full year of 2025, we expect net sales of $600 million to $610 million, representing growth in the range of 4% to 6%, driven by double-digit growth in the US region and improving trends in the Australia and New Zealand region, which contemplates an approximate $10 million FX headwind. Excluding the impact of FX, our 2025 net sales outlook would be growth in the range of 6% to 9%. We anticipate adjusted EBITDA to be between $27.5 million and $29.5 million, representing growth in the range of 18% to 27% from last year.

Our adjusted EBITDA outlook contemplates all tariffs enacted to date, inclusive of our actions to mitigate the impact. Our outlook also contemplates gross margin approximately flat to last year, modest leverage in both selling and marketing expense, and slight deleverage in G&A expense excluding stock compensation, depreciation, and amortization, and non-routine items due to modest headcount investments to support our channel expansion efforts. For modeling purposes, we are planning fiscal 2025 stock-based compensation of approximately $8 million to $10 million, depreciation and amortization expense of roughly $18 million to $20 million, interest and other expense of approximately $10 million to $12 million, an effective tax rate of negative 40%, and a weighted average diluted share count of approximately 10.8 million.

We expect fiscal 2025 capital expenditures in the range of $12 million to $14 million, primarily related to opening seven Princess Polly stores this year. For the first quarter of 2025, we expect net sales to be between $121 million and $124 million, which contemplates an FX headwind of approximately $1.5 million, representing growth in the range of 4% to 6% and consistent with our annual outlook. Adjusted EBITDA is expected to be in the range of $1.5 million to $2 million, driven by sales growth and gross margin expansion as we lap the targeted inventory actions for the Culture Kings brand in the first half of last year. We are expecting a weighted average diluted share count of 10.7 million for Q1. In closing, we made great progress delivering on our key priorities in 2024, leading to strong top and bottom-line results.

We are well-positioned to build on this momentum as we move into 2025, and I look forward to an exciting year ahead. Now we’ll open it up for your questions.

Q&A Session

Operator: Thank you. We’ll now be conducting a question and answer session. If you are in the question queue, you may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up a handset before pressing the star keys. One moment while we poll for questions. Our first question comes from Ryan Meyers with Lake Street Capital. Please proceed with your question.

Ryan Meyers: Hey, guys. Thanks for taking my questions. First question for me. You know, it sounds like you were saying that the United States growth in the 2025 guide should be double digits, but I’m just curious if you can comment on maybe what you’re seeing outside of the US that gives you confidence in a rebound there.

Ciaran Long: Yeah. Thanks, Ryan. Look, I think overall, you know, it’s great to see the progress we’re making. The US growth of 22% in Q4, it’s great to see that kind of continue. And also just the improving comps we’ve seen in the Australia region. I think, you know, we’ve seen improving comps across the brands. And I think as we continue to bring more and more of Culture Kings’ own brands onto our test-and-repeat model, that look, we know that model is so strong. We are seeing, you know, good performance there. I think as we talked a little bit about Q3, you know, Loiter continues to be a standout there. We saw, you know, Loiter up over 100% in Q4 across both regions for Loiter and gross margins up even further. And because we continue to roll out that test-and-repeat model, we expect that performance to continue.

And look, we have added more talent to the Culture Kings team. We have the new president of Culture Kings in Australia, Justin Hilberg, who has, you know, a deep background in the region, in that streetwear space, and across stores and online. And we’ve also brought in Brad Lancaster to head up our, you know, as head of our first-party brands, and really kind of, you know, seeing them already make an impact in the last couple of months and looking forward to what they can do there. And just to help Culture Kings grow, not just in Australia, but really across all regions.

Ryan Meyers: Okay. Got it. And then just thinking about the potential impact of tariffs here in the United States, you know, any comment on your ability to be able to take price and not have that come at the expense of volume or even maybe customer growth.

Ciaran Long: Yeah. Thanks, Ryan. Look, I think our guidance does contemplate all that we’ve seen in tariffs at this point, and we’re, you know, we’re happy to see that, you know, our EBITDA is going up even with the impacts of tariffs. I think we are primarily sourced out of China today, you know, our sourcing team is actively working with vendors to mitigate the impact of the tariffs we’ve seen to date. But look, I think we are uniquely positioned with the business model that we have to take price. And for us, we think about that, you know, because we’re pretty much exclusively online today, although we are adding stores and wholesale. You know, the product we have is exclusive to us. But also with our test-and-repeat model, right?

As we’re launching new products each week, we just have a unique opportunity to take price there. And I feel with the strength of our brands, we can do that. It’s certainly not where we want to go first. We’re actively working with our vendors, looking at, you know, moving sourcing to different locations. But we feel good about the guidance and feel good that we can offset the impact of tariffs.

Ryan Meyers: Okay. Got it. Thanks for taking my questions.

Operator: Thank you. And our next question comes from Ashley Owens.

Ashley Owens: Hi. Good afternoon, and thanks for taking the questions. I wanted to start on the gross margin guide. I’m just curious, you know, in the past, you’ve discussed how strong margins have really been underscored by the test-and-repeat model, and we really saw that play out within the second half of the year. Could you just give us some perspective as to some of the puts and takes for that last gross margin guide this year and maybe the magnitude of impact from increasing wholesale penetration, tariffs, and maybe just also some color on the shaping of the year would be helpful.

Kevin Grint: Yeah. Thanks, Ashley, for the question. You know, as Ciaran mentioned earlier, we’re really forecasting in our outlook gross margin will be roughly flat to FY 2024. And there certainly are some puts and takes to that. As we’ve mentioned, that guidance embeds the impact of known tariffs, as well as the actions we’re taking to mitigate those tariffs. From a shaping perspective, we certainly will see towards the first half of the year, we’re lapping some promotional actions taken in Australia in FY 2024. We’ll see some improvement there. As we go through the year, we’ll see a shape that looks very similar to FY 2024 as we continue through Q4. Q4 is our more promotional period, and we’ll see, you know, gross margin is lower than Q2 and Q3.

You know, we will see over time an impact of the growing wholesale initiatives upon our gross margin. You know, in this year, it’s not going to be a tremendous impact, but we feel confident with our outlook where we’re heading for FY 2025.

Ashley Owens: Okay. Great. And then I guess just second on that and just talking about the wholesale channel for you guys. Doing more in terms of expansion this year, but also adding in some of the Polly stores as well. Could you just provide updated thoughts on the overall mix of the business and any thoughts as to how big of a contributor wholesale could be or get to over the next couple of years? So I think more so in 2026 and beyond just based on what you just said. But any color there?

Ciaran Long: Sure. Thanks, Ashley. Look, I think we’re really happy with the progress we’re making across all of the brands and leaning into that strategy of putting our product where our customers are once it’s brand enhancing and has the right economics. You know, I think and, you know, we’ve really seen that in the US with that continued plus 20% growth in kind of the back half of 2024. Also, with our active customer count up 9% year over year, just really strong engagement there. You know, I think for us, you know, doing that test in Nordstrom with Princess Polly and Petal and Pup in Q4 and seeing them move quickly to wanting to bring both brands in-house for spring-summer across all of their chain. I would say, look, gives us a lot of confidence on that wholesale opportunity and I suppose the opportunity that we’re seeing across wholesale stores and online for all of the brands.

You know, I think we feel there’s a huge opportunity there. I think, you know, as a mix of business, I think long term, we’re always going to be predominantly online. But we feel just a big opportunity across our brands in all of the channels.

Ashley Owens: Okay. I’ll pass it along. Thank you.

Operator: Thank you. And as a reminder, if you’d like to ask a question, please press star one on your telephone keypad. That’s star one. And our next question comes from Eric Beder with SCC Research. Please proceed with your question.

Eric Beder: Good morning. Excuse me. Good afternoon. Let’s talk a little bit about Culture Kings. It seems like you’re making significant progress there. You mentioned in your remarks potentially about adding a store in the US. What would kind of be the performance or the markings you would see before you decide that would be something that you’d want to tell us through? And how should we be thinking about that?

Ciaran Long: Yeah. Sure, Eric. Look, I think we are, you know, we’ve continued to see great progress with Culture Kings in the US. Right? From an online perspective, also in their Vegas store, and continue to use marketing activations in the store to bring that brand to life online and that unique retail payment aspects that they have. Yeah. I think all of that gives us confidence on the long-term opportunity for Culture Kings in the US. I think as we’ve moved more and more of their first-party brands onto the test-and-repeat model, we’re also seeing improved, you know, sales comps, improved margin performance, and really just great customer reaction to the new product they’re bringing in. So I think, you know, we’re starting to bring together all the pieces we need to continue kind of going after that Culture Kings expansion opportunity.

We are looking for first store locations for Culture Kings. You know, we’re working through what aspects of the Vegas store we will bring in to that new location in the US. We would like to have one this year, and we will share more on timing as we get clarity on the location.

Eric Beder: Great. In terms of Princess Polly and the store expansion, excuse me, you’re up to six coming to thirteen. What level of infrastructure do you need to build to make sure that the stores kind of maintain the quality control that you want them to have? And how should we be thinking about the ability to leverage after the infrastructures and how do you potentially leverage it going forward? Thank you.

Ciaran Long: Yeah. Thanks, Eric. Look, we’re really pleased with all we’ve seen so far on the Princess Polly stores. And, you know, as we think about that, it’s around building that brand. You know, we see thirty percent of the customers coming into the store are new to the brand. We’ve also seen very clearly now that the stores are having a halo effect within the region of the store, and we’re kind of measuring that on about a ten-mile radius. And so all giving us a lot of confidence. You know, I would say, look, the stores are new to Princess Polly, and working through that. They have added some talent last year, but that is doing a great job of rolling out the new stores, operating them. You know, I feel, look, we have high expectations for the brand.

We have high expectations internally and working continuing to the team are continuing to push themselves to, you know, do better, bring, you know, do better from a merchandising and a visual merchandising perspective in the store. You know, we will add some we will continue to add some talent this year to go after those store opportunities. But pretty modest and all contemplated in our guidance. And look, I feel like there’s just a lot of opportunity for Princess Polly themselves across all their channels that they’re in to continue to build that brand.

Eric Beder: Great. Good luck for 2021.

Operator: Thanks. Thank you. And as a reminder, if you would like to ask a question, please press star one. And our next question comes from Randy Konik with Jefferies. Please proceed with your question.

Randy Konik: Hey. Thanks a lot. Sorry. I got on a little late here. I’m trying. Just walk us through your thoughts on just the environment right now. Yeah. It seems like you guys are getting seems to be stable. Stabilization trends and getting more visibility in the business. Maybe just walk us through that, where we’ve come from over the last few quarters, and then how you think about kind of the trends in the and, you know, your idiosyncratic trends in your business relative to the environment will be super helpful as we think about the balance of 2025. Thanks.

Ciaran Long: Yeah. Sure. Sure, Randy. And look, I’m delighted with the work the team has done to kind of bring us through the journey and bring a lot more stability to what we have. And really, I think, just keep demonstrating the opportunity that we have long term with all of these brands. You know, if I think maybe regionally, I think, you know, we are seeing improvements in comps in Australia, and I think as I talked about a lot of that coming from moving Culture Kings onto that test-and-repeat merchandising model, I think we feel very confident that we would continue to see improvements there coming from moving them onto that test-or-repeat model, but also the talent that we’ve brought in and the opportunity that they can go after there.

And so, you know, feeling good in the progress that we are making there. I think, look, the standout for us continues to be the US. Right? You know, overall growth of 17% last year coupled with a 9% growth in inactive customers. As Kevin talked about, margins up, EBITDA margins, you know, up significantly year over year. And I think, you know, really showing, I think, you know, the power of this model and the strength and opportunity we have across these brands. You know, I think for us, it’s been a, you know, I would say Q1, you know, we certainly saw, I suppose, a distracted consumer in that January period, and, you know, a combination of, you know, the fires, whether TikTok distraction as well, I think we are seeing improvements in comps as we’ve gone through the quarter.

I think particularly at Polly, you know, that and Petal, that spring-summer products, has really kicked in. We feel really good about the inventory and the newness that we’re bringing in. And for Polly there, you know, white dresses have kicked off in a big way. A little bit later than last year, but coming strong. And for Petal, you know, just doing a really nice job with the newness that they have across prints, you know, some of the elevated florals and from a color perspective, just doing really well on their gelato pastels is performing really strongly for them. So look, I think we feel really good about the opportunity. We feel we’ve got a unique model here that allows us to operate differently and just gives us a great long-term opportunity.

Randy Konik: Super helpful. Last question. You know, I saw the announcement about the Princess Polly stores in 2025. Can you give us your thoughts on, like, a broader long-term vision on how you think about, you know, different channels of distribution now that you’re building more of a stores business? You have so you’ve done some stuff in wholesale. And, obviously, the DTC with ecom. Maybe give us your thoughts on how your vision let’s say, you know, three to five years away, on how you kind of think about the different channels and how they should kind of commingle.

Ciaran Long: Yes. Thanks, Randy. Look, I think, again, it’s a huge opportunity. I think the tests we’ve done across the brands have been really informative for us, and I think it’s fantastic, the success that each of the brands have seen in the different channels. And, you know, as we think about this, it’s very much back to that strategy. Right? Are we putting our product in front of customers where they are? Is it brand enhancing? From a customer a brand-building perspective and also does it have the right economics for us? I think they’re really the choices we make. You know, I think as we think about the different channels, you know, our online business is uniquely positioned with our test-and-repeat model to bring in newness every week.

That’s core to what we do. It’s core to the brands. It’s really what our customers want. And, you know, I think that’s something we want to bring to life in our own stores. And we are working to do that. That newness every week really works for us. You know, I think with wholesale partners, that’s a little bit more difficult. But still great places to just show off great product, put it in front of new customers, and we’re seeing that success in what we’re doing at Nordstrom and some of our other wholesale partners. So, you know, I think we’ll continue to lean into those three areas and, you know, I feel like we’ll make sure I think long term, we’d predominantly be a direct-to-consumer business, but I feel there’s, you know, big meaningful opportunities for us with our own stores and from a wholesale perspective.

Randy Konik: Great. And I look forward to seeing you in a couple of weeks at the Princess Polly store.

Ciaran Long: Yeah. We invite you all to come there. It’s a superstore, and we’re delighted to open it up in New York next week.

Operator: Thank you. There are no further questions at this time. That also does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time.